Fake GST Invoices: Issuers, beneficiaries may be

booked under COFEPOSA

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Nationwide drive against fake invoice results in arrest of 25

persons
The Finance Ministry on Sunday indicated that issuers and beneficiaries of fake GST
invoices can be detained under the COFEPOSA (Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act). At present, actions are being initiated under the
GST law, income tax law and money laundering act.

This indication has come at a time when 25 persons, including the son of an MLA, were
arrested during the last four days as the result of a nationwide drive against fake
invoices. Those arrested include two kingpins and two professionals in around 350
cases booked against 1,180 entities for issuance of fake invoices. The actual number of
fake ITC involved is being ascertained. Search and investigations are on to identify and
apprehend the other persons who were involved in the racket and also the beneficiaries
who have used the fake invoices to evade GST, income tax, and for money laundering.

“Considering the menace of the fake invoices and hawala racket and their damaging
impact on the stability of the economy, it is also being examined whether, apart from
taking action against the beneficiaries under GST laws, Income Tax Act, and Prevention
of Money Laundering Act, issuers of fake invoices as well as beneficiaries of such
invoices can be detained under COFEPOSA,” a senior Finance Ministry official said.

COFEPOSA prescribes the detention of persons for a period up to two years, if he/she is
allegedly involved in smuggling goods or abetting the smuggling of goods; or engaging
in transporting or concealing or keeping smuggled goods or dealing in smuggled goods
otherwise; or harbouring persons engaged in smuggling goods or in abetting the
smuggling of goods.
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Another official mentioned that apart from various legal actions, the procedure for new
GST registration is also being tightened. The businesses whose owners or promoters do
not have commensurate income tax payment records will require physical and financial
verification before their companies can be given GST registration.

Nationwide drive
Directorate General of GST Intelligence (DGGI) sleuths along with local GST officials
acted in Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram,
Jind, Ballabhgarh, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad,
Mathura, Raipur, Visakhapatnam, Jamshedpur, Patna, Imphal, Meerut, Guwahati,
Pune, Siliguri, Bhopal, Bhubaneshwar, etc.

In one such case, the DGGI, Mumbai Zone arrested Sunil Gutte, the son of a sitting
MLA, sugar baron Ratnakar Gutte, and the Managing Director of Sunil Hi-tech along
with his business associate Vijendra Ranka ( alleged kingpins of fake invoice scams
worth of ₹520 crore of ITC in Maharashtra). Similarly, the Surat DGGI Zone booked a
case of bogus supply of MS scrap by 13 firms. Two recipient beneficiaries of the fake
ITC were ASVI Steel and SV Steel, and Nazir Barkatali Virani, who reportedly manages
the affairs of these firms, was arrested. A racket where fictitious firms were involved in
generation and passing of fraudulent ITC of ₹113 crore in bogus bills of iron and steel
scrap was unearthed.

Published on November 15, 2020

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